Getting Tech Into The Boroughs

A number of elected officials tweeted “I told you so” when the news came out at the end of last week that Amazon had taken space in Hudson Yards and will move 1500 jobs there soon.

While the question of what kind of public funded incentives should be used to incentivize the behavior of the wealthiest corporations in the world is a conversation that we must have, the truth is we all lost something when Amazon decided not to build their second headquarters in Long Island City and bring 25,000 good paying jobs to Queens.

Where companies locate does matter. Sure you can take a subway from Jamaica Queens to Hudson Yards and some people will.

But NYC’s large and rapidly growing tech sector remains largely white and asian and centered in lower and midtown Manhattan.

I dream of a day when communities like the South Bronx, Jamaica Queens, Brownsville Brooklyn, and St George in Staten Island can have tech companies as residents and tech jobs will be readily available to the residents of those communities.

A good start is NYC’s groundbreaking CS4All program in which computer science teachers and classes are being made available in every public school building in NYC. Another good start is CUNY’s emphasis on making high quality computer science majors available at many of its twenty five campuses around NYC.

We are well on our way to training the tech workforce of tomorrow which can and should be as black and brown and female in the future as it is white and asian and male today.

But we also must connect the tech sector to the vast part of NYC that exists outside of lower and midtown Manhattan.

And the best way to do that is to create incentives of some sort for large and small tech companies to spread out into the outer boroughs.

There is a fantastic building in the Brooklyn Navy Yard called Dock 72. I have suggested to many of the tech companies that I work with that they move there. Some have taken a subway over there to take a look. But many have told me “I’m happy here in Manhattan.”

Locating in Manhattan is easy. You can recruit employees from New Jersey, Westchester and Connecticut. Moving to the boroughs is a harder decision.

So we need to encourage that behavior. If not tax incentives, then let’s try something else.

But if we leave this to the market to sort out, we will see the next 250,000 jobs created by the tech sector located in places like Hudson Yards and not Industry City.

Comments (Archived):

kidmercury
Dec 8, 2019

There are two things NYC missed out on by losing Amazon hq2:1. Lots of jobs and ensuing network effects for NYC tech GDP2. Higher cost of living and greater homelessnessThe distribution of gains from #1 and the distribution of costs from #2 are not uniform. Put more simply, the trickle down economic policies of bribing Amazon and other tech Giants increases income inequality. The rise of AOC, Elizabeth Warren, Bernie, etc shows there is a real aversion to greater income inequality. Solutions for growth need to understand this. The playbook for economic growth over the past 20 years (probably longer) is coming to an end.

fredwilson
Dec 8, 2019

True. But that is only half of the inequality equation. Getting good paying jobs to all of NYers is the other half. And that was lost in this conversation

Vendita Auto
Dec 8, 2019

Same globally. The Mark Carney environmental mindset could just as easily transpose to the inequality equation

marko calvo-cruz
Dec 8, 2019

This comment confuses me. Is Amazon’s HQ beneficial for bringing employment to current NYers or attracting engineers from other areas?If the latter, wouldn’t it just push out the people currently living in these boroughs since they aren’t sufficiently trained? In which case, these aforementioned politicians *are* protecting their (current) constituents.There’s something distasteful about bringing HQ-scale jobs to a city without HQ-scale training

jason wright
Dec 8, 2019

I agree, but i sense that Fred thinks there will be a beneficial ripple effect. If he would cite other examples where this has been shown to work…then we can move on to the next stage, planning.

fredwilson
Dec 8, 2019

both

kidmercury
Dec 9, 2019

IMHO this is a monetary policy issue. so long as monetary policy is ignored, the proposed mechanism of growth (i.e. importing tech giants to drive prices up) will be increasingly unviable — and the people will increasingly express this viewpoint politically.

William Mougayar
Dec 8, 2019

Many government officials lack the will of making strategic decisions because the impact is far into the future, and not always visible during their elected timeframes.I love the Brooklyn’s Navy Yard area. It has a lot of potential. Hudson Yards is nice but it’s expensive and sterile.

Matt A. Myers
Dec 8, 2019

I think it’s less about the lack of will and more lack of critical thinking development not allowing them to understand how systems unfold, cascade – positively or negatively. Of course if you have fear, resistance, because you don’t understand something fully or enough – you won’t have the passion, the drive – the will, behind you leading one to action; people likewise can misunderstand something and be passionate for it as well.

awaldstein
Dec 8, 2019

Navy Yard is positive, a rooftop vineyard even, though transportation still an issue but fixable potentially.Home to the largest and oldest community of feral cats in the country btw!Hudson Yard is an aberration honestly.

William Mougayar
Dec 8, 2019

Yup !

jason wright
Dec 8, 2019

A crime against a community.Financial architecture (Taleb).

awaldstein
Dec 9, 2019

not following.

Rob Underwood
Dec 8, 2019

With Computer Science Education week upon us, a good time to reflect on the progress of CS4ALL. Incredible now to see the “dividends” — graduates of these programs and schools now entering the work force and beginning careers in tech. It’s really fantastic to see.

fredwilson
Dec 8, 2019

Yes it is and your early and steady support and work on this effort has been very impactful Rob

pointsnfigures
Dec 8, 2019

I think it’s important to allow them to choose socially what they do. It’s pretty hard to tell a person that came from a lower middle class down background that they have to do a startup. Maybe they want the security of working for a big or established company.

awaldstein
Dec 9, 2019

Entrepreneurial in tech drives entrepreneurial is service and food and on and on.It is incorrect to think that entrepreneurial means tech, it also means small business.Amazon in LIC would have driven a ton of this.

pointsnfigures
Dec 9, 2019

Agree! We used to joke, “I wonder if the exchanges left Chicago, how many bartenders and divorce attorneys would be out of jobs?” In this case, 25k people moving into Queens would have created an uncountable number of ancillary jobs not related to Amazon, in addition to the jobs that were created because of Amazon. A colossal lapse in judgement by the NY politicians who championed Amazon’s demise.

Rob Underwood
Dec 8, 2019

I did a little. You did a lot. We all did some.

Matt A. Myers
Dec 8, 2019

“Ideologues [like AOC] don’t care about nuance”Amazon’s plans for HQ2 would have brought 25,000 jobs and $27 billion in tax revenue to New York – now Amazon will only create 1,500 jobs in NYC, leasing 335,000 sqft vs. 6-8 million. She’s trying to claim this is as victory. This is the same shallow emotional manipulation that Bernie Sanders has used to rally his followers, not citing or basing his policy on numbers, on all facts – a similar tactic of Trump, of course Trump at more of an extreme catering to a similar but different audience who’ve been indoctrinated and haven’t developed their critical thinking far enough.

awaldstein
Dec 8, 2019

Amazon in Hudson Yards is a massive loss in my opinion.(Beyond my disdain for the development itself,)For the reason you state but also for the changes it would have driven in the city, especially in added transportation, especially by water.People from the Bronx, from all over Jersey could have fed that skill base.And everyone would have benefitted by it.

Tom Labus
Dec 8, 2019

Who directed them there?

awaldstein
Dec 8, 2019

dunno.tons of empty space though.

jason wright
Dec 8, 2019

A tax lawyer, probably.

Tom Labus
Dec 8, 2019

All large tech and other companies need to be aware of the social component of their analysis going forward. They need to step much more diplomatically. AMZN’s PR moves in Seattle have not gone well at all and are really a disaster. This is a fact of public company life 2020.Let’s hope that Hudson Yards is just a way of re starting their original plans for NYC.

jason wright
Dec 8, 2019

This?https://industrycity.comhttps://www.dock72.comLooks great. What’s the present occupancy rate?Neither name feels quite right.”Industry” feels ‘retrospective’.”Dock 72″ – again retrospective. It shouldn’t be about what it was. It should be about what it wants to be.

Salt Shaker
Dec 8, 2019

The concessions offered to AMAZN were far too rich w/out any assurance or guarantees that 25K jobs would ever be created. It also sets a bad precedent. It’s one thing when a city or municipality offers tax concessions to an existing company to forego relocation, a known economic quantity, it’s quite another to offer massive concessions to a company without any backend guarantees. It’s like betting on the come line in Vegas. Amazon’s growth strategy in Seattle is predicated on recruiting and bringing talent to the city, a strategy whose efficiency and sustainability is questionable. It’s no surprise AMAZN is creating 1.5K jobs in NYC w/ out concessions, and it will be no surprise when they continue to staff up beyond that number. The growth of the company has outpaced their ability to meet their recruitment needs in current geography. In hockey parlance, they’re just “skating to the puck.”

Matt A. Myers
Dec 8, 2019

Certainly NYC’s population will warrant a significant local staff, however Amazon HQ2 is now planned for Crystal City, Arlington, Virginia.

Salt Shaker
Dec 8, 2019

There never was any guarantee AMZN would hire 25K employees in NYC. That was a projection, though the concessions offered by the state/city, predicated on those hires, was not.

awaldstein
Dec 9, 2019

I think the concessions were not as big an issue as the process.There were literally no community involvement as I understood it till the end of the process. It never works unless you put in the time and effort to bring the community into it.My first house was in the Rose Garden district of SJ back when Creaf took hold.They wanted to put the hockey stadium in and build another runway for the airport. I ran the community group. Two years of meetings later, it all got done and concessions all around.People and community takes time.

jason wright
Dec 8, 2019

You’re going up against an unstoppable force of nature, island evolution (Manhattan), as described by Charles Darwin. Waving a magic policy wand isn’t going to change the basic geography of the boroughs of NYC. It would take probably $500 bn to reconfigure the human map (transportation, bridges, buildings, housing, et.c.) to create the kind of economic equalisation effect you are wanting to see, admirable though it is.

pointsnfigures
Dec 8, 2019

Yup, and Queens seems like the most likely borough since it’s closer to the airport. Brooklyn of course too, but Queens has easy in/out for travel.

bpaulphillips
Dec 8, 2019

There is a pretty big incentive in the TCJA to build businesses/companies (in addition to real estate) in Opportunity Zones which are low income census tracts selected by the Governor of each state.If investors put capital gains into a qualified (I.e. dedicated) Opportunity Zone Fund and the fund invests in businesses (or real estate) and holds it for 10 years any gain on the investment no matter the size id tax free. It’s a good tool to use to accomplish job creation in areas that need it.The Navy yard is one of of 8700+ Opportunity Zone in the USA – and The Pearl Fund (https://thepearl.fund) is an OZ early stage venture capital fund that invests in high potential businesses that are in Opportunity Zones. The Pearl Fund is located in Dock 72 and an office in Scranton.We are looking for investors, OZ businesses, and mentors (we would love your assistance Fred) with what we are doing: tax-free, venture sized returns with high impact in low income communities (via job creation)

Richard
Dec 9, 2019

If climate change effects are what you expect, why would you build the next generations industry at sea level? VCs seem very shortsighted at times. If you care about minorities – help get them out of high cost cities like the boroughs. NY is huge. There is a plus side to global warming – places line the Catskills will be greener and warmer for more months of a year. A tech center at Grossingers –

Salt Shaker
Dec 9, 2019

I like it. Bingo and Simon Sez instead of pool tables and free snacks.

Richard
Dec 9, 2019

And early adopters of trans friendly living. Brooklyn is romanticized they way LA beaches are. If Fred wants to play the raceCard – play it right. Govt should educate Minorities about risk and encourage the exiting of high cost / high risk cities BEFORE the next white flight.

gmalov
Dec 9, 2019

There are obviously multiple paths in how tech jobs can get into the boroughs, my view has always been, direct more resources on education; create more aligned supply. You don’t need Amazon on your block, if you don’t have the local supply of talent required to benefit.Also, keep in mind, between 2009-2018, the highest unemployment rate in NYC (5 Boroughs), were people 18-24 years of age, 9.4%, nearly twice as high as all other groups. Meanwhile, tech sector jobs grew 80% between 2009-2018; strong demand pull, but significant age groups and local areas underrepresented.I’m not convinced by the proximity case study…

Thor Snilsberg
Dec 9, 2019

Right on Fred. There are thousands of bright kids in the outer boroughs literally dying in the vine because they lack high-quality STEM learning opportunities.We have a long way to go in terms of preparing and integrating more “under represented STEM minorities” for the STEM sector and the upward economic mobility it affords. Computer Science in schools is a huge step.For 10 years, we have asked our Title 1 students to draw a scientist. The vast majority of drawings come back white and in lab coats. We have to dispell myths like these.Research shows that kids develop their “STEM identity” well before adolescence. The key is connecting kids to STEM learning opportunities early in life so that by the time they get to jr. and sr. high school they have a sense that science is for them.

Rudo
Dec 9, 2019

Surprising that the sentence “But if we leave this to the market to sort out […]” it’s used as a problem in this case but as a good thing for many other things.

Chris Peterson
Dec 9, 2019

I’m confused: is it hard to get tech employees to want to work in Brooklyn? Maybe we hang out with different crowds, but literally every 20-to-30 something tech employee I know either works in Brooklyn or would rather do so. If the concern, as I suspect it might be, is that capital is located in manhattan, is that the problem of the tech companies?Additionally: I support more data literacy in schools, but I don’t think there is strong evidence that individual coding education has large structural results. To the contrary, left on its own it may deepen socioeconomic inequality by privileging students with the resources and home environment to take advantage of those opportunities. IIRC, Black/LatinX students actually have a disproportionally high share of IT degrees, but mostly from state branch and community colleges that tech companies don’t recruit from and that don’t provide job training. See eg https://cmsw.mit.edu/wp/wp-…

robdiana
Dec 9, 2019

I think a large part of the moves to Manhattan is about safety. It is a safe decision to go to the central hub because you know talent is there. Like you said, going to a borough is a harder decision. Cities outside of silicon valley and NYC have the same problems. Why not have an office in Baltimore or Philadelphia? There is definitely young talent there if you look at the number of excellent schools in both locations. There is also plenty of “experienced” talent in those areas (and the surrounding suburbs) for these companies. The most often cited reason I see companies not choosing these locations is “the talent tends to move away”, but that is really because the companies continue to fight in battlegrounds like SV and NYC.

Salt Shaker
Dec 8, 2019

Phase I of the 2nd Avenue subway is (3) stops, cost $4.5B and literally took decades to build. Phase II is scheduled to open between 2027-2029, but don’t hold your breath. Infrastructure investment and implementation takes years, if not decades. Somehow this part of the equation frequently gets lost in the AMZN discussion. Who knows what AMZN’s staffing needs will be 5+ years out? 25K jobs is rooted in company projections, with no guarantees or correlation to state/city concessions. To quote Reagan, “trust, but verify.”

awaldstein
Dec 9, 2019

This is not true with Ferries.They can scale fast and effectively.Right now there is no way to take a Ferry from LIC to Jersey City as the East and West side ferry lines are not connected. All it takes is a contract as the terminals are all built.How about a ferry to LGD? The Bronx ferry goes right by the airport.

jason wright
Dec 9, 2019

$4.5B? How many new miles is that?

awaldstein
Dec 9, 2019

Yup.Back when Luli had an opportunity to build a kitchen there. Impossible with trans for her team.Without trans for businesses nothing works.But need to say that not having a subway in Red Hook is one of the things that makes it kinda cool. CitiBikes, Uber and Ferry are enough.

jason wright
Dec 9, 2019

https://www.dock72.com/gett…”Getting there is easier than ever.” It seems like a nook that you would only go to to go to. It’s not a crossroads. It’s not ‘easy’. It’s ‘edge’. Density is rarely at the edge.Build it and they will come? Um.https://www.dock72.com/avai…It still looks very available.In summary a poor name, one that only emphasises its poor location. Probably a great building. The branding and marketing needs work.

Salt Shaker
Dec 9, 2019

I think ferries are an awesome solution to many Tri-state traffic/commuting issues. Assuming there were 25K hires by AMZN in LIC, a good chunk of those hires (and those employed in related services) would likely reside and commute from Manhattan. The NYC Waterway ferries can only carry a few hundred passengers per trip and cost in the range of $20M+ each. To accommodate the increased demand from AMZN (and related services), the new ferry lines would prob also require significant new investment in infrastructure, whether that’s on the east and/or west side of Manhattan. My point being, ferries are not an easy and immediate solve. As an aside, for 30 years LIC was looked upon w/ its high growth potential that seemingly took forever to realize. I think investment in even a modest ferry system could have narrowed that growth curve considerably.

Anne Libby
Dec 9, 2019

Ferry to LGA would be magical.

Salt Shaker
Dec 9, 2019

Less than 2 miles.

jason wright
Dec 10, 2019

2? 2?! That is a scandal. The future looks grim for NYC.

Salt Shaker
Dec 10, 2019

LOL. The 2nd Ave subway build out is an enigma. It literally took decades. They actually built the tunnel years and years ago and had to abandon the project when the city was nearing bankruptcy. Future subway builds are now estimated at $450M a mile. They’re boring through bedrock, so it’s a long and laborious process.